Europeans are facing higher natural gas prices this winter as demand rises due to unusually cold weather, while supply remains tight because of falling stockpiles. The price surged this week to a two-year high of 1.68 euros ($1.73) per therm, which equals about 2.83 cubic meters of gas.
Futures at the Title Transfer Facility in the Netherlands, a key natural gas trading hub, climbed by 4 percent to 58 euros per megawatt-hour ($635 per thousand cubic meters), the highest since February 2023.
This price increase will affect many people across Europe, as natural gas is used to generate electricity in power stations. Arne Lohmann Rasmussen, chief analyst at Global Risk Management, warned that the European Union is at higher risk of entering spring with dangerously low gas reserves. Rasmussen added that the limited supply has driven short-term price spikes and is influencing long-term gas pricing.
On February 10, European gas storage levels stood at 49 percent of capacity, compared to 67 percent on the same day last year. The United Kingdom, with smaller storage facilities, faces particular risks as it relies on overseas gas suppliers more frequently than other European nations.
Experts also point to the ongoing Russia-Ukraine conflict, which has disrupted gas supplies to Europe, contributing to the rise in prices. As supplies shrink, European governments were hoping for milder weather to ease demand. However, freezing temperatures are expected to hit northwestern Europe soon, which will likely push February’s demand up by 17 percent compared to the same month last year.
In addition, EU policymakers are concerned that the bloc’s gas supply rules may backfire when gas companies restock in summer. The EU recently set binding targets to ensure gas storage is 90 percent full by November. However, there are fears this could allow sellers to raise prices, knowing the EU has no choice but to meet the target.
Reuters reports that Trading Hub Europe GmbH, which manages Germany’s gas market, is in talks with policymakers about a possible subsidy scheme to encourage gas stockpiling. Torsten Frank, the company’s managing director, said no decision has been made yet, and discussions with the ministry and regulator are ongoing.
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